Winmark Corporation (Nasdaq: WINA) announced today net income
for the quarter ended September 30, 2017 of $5,719,000 (or $1.33
per share diluted) compared to net income of $6,094,200 (or $1.41
per share diluted) in the third quarter of 2016. For the nine
months ended September 30, 2017, net income was $16,908,600 (or
$3.83 per share diluted) compared to net income of $16,051,400 (or
$3.72 per share diluted) for the same period last year.
The Company experienced royalty growth driven primarily by
increased sales from franchisees, while profits in the leasing
business were lower when compared to last year due to a decrease in
customer activity within the lease portfolio. Brett D. Heffes,
Chief Executive Officer, commented, “We are pleased with the
performance of the franchising business during the quarter, and the
response to Winmark Franchise Partners, which we have continued to
invest in during the quarter, has been extremely positive.”
Winmark Corporation creates, supports and finances business. At
September 30, 2017, there were 1,210 franchises in operation under
the brands Plato's Closet®, Once Upon A Child®, Play It Again
Sports®, Style Encore® and Music Go Round®. An additional 62 retail
franchises have been awarded but are not open. In addition, at
September 30, 2017, the Company had a lease portfolio of $40.6
million.
This press release contains forward-looking statements within
the meaning of the safe harbor provisions of Section 21E of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”),
relating to future events or the future financial performance of
the Company. Such forward-looking statements are only predictions
or statements of intention subject to risks and uncertainties and
actual events or results could differ materially from those
anticipated. Because actual result may differ, shareholders and
prospective investors are cautioned not to place undue reliance on
such forward-looking statements.
WINMARK CORPORATION CONDENSED BALANCE SHEETS
(unaudited)
September 30, 2017
December 31, 2016
ASSETS Current Assets: Cash and cash
equivalents $ 1,060,700 $ 1,252,900 Marketable securities — 199,900
Receivables, net 1,708,100 1,479,200 Restricted cash 40,000 40,000
Net investment in leases - current 16,311,000 17,004,800 Income tax
receivable 1,721,500 1,678,800 Inventories 67,000 87,500 Prepaid
expenses 865,400 1,050,700 Total
current assets 21,773,700 22,793,800 Net investment in
leases – long-term 24,249,500 24,410,700 Property and equipment,
net 547,700 769,600 Goodwill 607,500 607,500
$ 47,178,400 $ 48,581,600
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) Current
Liabilities: Notes payable, net $ 3,236,100 $ 1,990,000 Accounts
payable 1,474,600 1,692,000 Accrued liabilities 2,906,100 1,811,100
Deferred revenue 1,649,300 1,864,700
Total current liabilities 9,266,100 7,357,800 Long-Term
Liabilities: Line of credit 41,900,000 23,400,000 Notes payable,
net 29,650,100 19,926,500 Deferred revenue 1,458,200 1,423,800
Other liabilities 808,400 993,600 Deferred income taxes
3,485,300 3,331,900 Total long-term
liabilities 77,302,000 49,075,800 Shareholders’ Equity
(Deficit):
Common stock, no par, 10,000,000 shares
authorized, 3,821,528 and 4,165,769 shares issued and
outstanding
— 2,976,100 Accumulated other comprehensive income (loss) — (9,900
) Retained earnings (accumulated deficit) (39,389,700 )
(10,818,200 ) Total shareholders’ equity
(deficit) (39,389,700 ) (7,852,000 ) $ 47,178,400
$ 48,581,600
WINMARK CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Quarter Ended Nine Months Ended
September 30, 2017 September 24, 2016
September 30, 2017 September 24, 2016 REVENUE:
Royalties $ 12,316,700 $ 11,311,000 $
33,865,100 $ 32,140,800 Leasing income 3,915,800 4,174,000
13,722,000 12,839,000 Merchandise sales 773,100 520,000 2,058,500
1,882,400 Franchise fees 317,800 501,800 1,262,500 1,367,800 Other
244,500 227,500 1,033,100
984,400 Total revenue 17,567,900 16,734,300
51,941,200 49,214,400 COST OF MERCHANDISE SOLD 728,300 499,100
1,942,400 1,784,800 LEASING EXPENSE 792,000 646,200 2,724,000
2,010,400 PROVISION FOR CREDIT LOSSES (13,300 ) (29,700 ) (26,200 )
(52,000 ) SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
6,208,900 5,180,700 19,179,400
17,671,500 Income from operations 9,852,000
10,438,000 28,121,600 27,799,700 INTEREST EXPENSE (613,900 )
(552,300 ) (1,559,300 ) (1,786,800 ) INTEREST AND OTHER INCOME
(EXPENSE) 28,000 (6,300 ) 29,900
(7,300 ) Income before income taxes 9,266,100 9,879,400
26,592,200 26,005,600 PROVISION FOR INCOME TAXES (3,547,100
) (3,785,200 ) (9,683,600 ) (9,954,200 ) NET
INCOME $ 5,719,000 $ 6,094,200 $ 16,908,600 $
16,051,400 EARNINGS PER SHARE – BASIC $ 1.42 $ 1.48
$ 4.09 $ 3.90 EARNINGS PER SHARE – DILUTED $
1.33 $ 1.41 $ 3.83 $ 3.72 WEIGHTED
AVERAGE SHARES OUTSTANDING – BASIC 4,024,692
4,116,957 4,131,269 4,113,819
WEIGHTED AVERAGE SHARES OUTSTANDING – DILUTED 4,314,412
4,328,168 4,416,185
4,320,284
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version on businesswire.com: http://www.businesswire.com/news/home/20171017006443/en/
Winmark CorporationBrett D. Heffes, 763-520-8500
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